The BV company in the Netherlands is a flexible and cost-effective legal form, often chosen by entrepreneurs for international business expansion. Some basic features of the Netherlands, its legal and tax system, and the most important issues regarding the establishment and operation of a BV company in the Netherlands (equivalent to the Polish limited liability company) were described in my earlier posts.
Today I would like to briefly outline what the process of selling shares in such a company looks like, given that an increasing number of Polish entrepreneurs own such a company and turn to me for legal support in selling shares, increasing capital, or in the entire process of bringing a new investor into the company, which usually includes concluding an investment agreement and changes to the company agreement and company bodies.
Transfer of ownership of shares in a BV Company in the Netherlands
Generally, when planning the transfer of ownership of shares in a BV company in the Netherlands, the following rules resulting from Dutch regulations should be considered. For clarity, transfer of ownership of shares can be, for example, a sale, exchange, or donation, but most often it is a sale of shares:
- The sale of shares in a BV company with its registered office in the Netherlands requires, for its effectiveness, the preparation of a notarial deed by a notary in the Netherlands. As a rule, in the Netherlands, all operations regarding shares in a BV company such as transfer, issuance of new shares, or pledge of shares, etc., require notarial activities.
- Importantly, the involvement of a notary in the Netherlands consists of preparing a full notarial deed, unlike in Poland, where notarized signatures are sufficient for the transfer of shares. This means more formalities and greater involvement of the notary in preparing the share transfer agreement.
- The transfer of ownership of shares becomes effective at the moment of concluding the sale agreement in the form of a notarial deed. There is no division here into two, technically speaking, actions: transfer of shares and registration in the Trade Register (KVK). The transaction is effective at the moment of signing the notarial deed by the notary. The notary then transmits information about the transaction to the Trade Register in the Netherlands, and we – the parties – receive an updated register of shareholders. This is a private document, signed by the company’s management board, equivalent to the list of shareholders in a Polish limited liability company, but significantly more detailed.
- The only exception, when notification to KVK is mandatory, is when the sole shareholder of the company sells all their shares. Then registration of this fact in the Trade Register is required.
Changes to the BV company agreement
A common situation is the conclusion of a share sale agreement in a BV company combined with changes to the company agreement and changes to the company’s management board. This most often occurs when a new investor enters the company based on an investment agreement that provides for a number of changes in the company. So that the rules of the company’s operation, largely resulting from the company agreement, correspond to the new situation where there is more than one shareholder.
In the Netherlands, changes to the BV company agreement require notarial deed form for their validity. Unlike in Poland, these changes become effective at the moment of signing the notarial deed. The notary then sends the notarial deed including the changes along with the current version of the company agreement to the Trade Register. This is essentially an administrative action that is irrelevant to the question of when these changes take effect.
An advantage of the BV company in the Netherlands is that activities such as the sale of shares or changes to the company agreement can be carried out on the basis of a power of attorney, the granting of which does not require any extraordinary formalities such as apostille or legalization. The practice of notarial activities in the Netherlands is that shareholders grant power of attorney to employees of the notarial office in the Netherlands to sign the share sale agreement and to introduce appropriate changes to the company agreement in notarial deed form. This is a significant simplification of the entire procedure, which saves time and energy needed, for example, for agreeing on the content of changes to the company agreement or share sale agreement, instead of spending them on arranging and certifying powers of attorney. For comparison, carrying out similar transactions in Germany or Switzerland can sometimes be extraordinarily burdensome precisely because of the need to obtain apostille and legalization, and sometimes even translations of the apostille or legalization clauses themselves.
Appointment of a new member of the management board in a BV company
Making changes to the management board of a BV company does not require notarial deed form. An ordinary resolution of the shareholders’ meeting is sufficient. Appointment to the management board is effective from the moment of adopting the resolution. In practice, in this type of transaction, i.e., changes in the company related to the sale of shares or the entry of a new shareholder, changes to the management board are usually also included in the notarial deed covering the transfer of ownership of shares and changes to the company agreement. The notary then sends all changes adopted in the notarial deed to the Trade Register. However, as a rule, company representatives can themselves, if necessary, report changes to the management board to KVK by filling out and submitting two forms: Form 16 and Form 11. Changes can be reported online, but also in paper form.
Sale of shares, changes to the company agreement in a BV Company in the Netherlands – conclusions
Comparing this type of transaction carried out in the Netherlands, Germany, or Switzerland, I believe that the Netherlands, its legal and tax system, the legal position and manner of operation of the notary in this system, and the regulations applicable to commercial companies, is characterized by very high flexibility and an informal manner of operation. In the case of the Netherlands and other Western European countries such as Germany or Switzerland, a significant challenge remains, due to the specifics of the legal services market, finding a notarial or legal office that can support us in such a transaction.
Paweł Osiński
Attorney, expert in international corporate law, cross-border transactions, and white-collar criminal law.